Pending-home sales plunged 30 percentin May from April, more than twice the 13-percent decline expected. Construction spending fell 0.2 percent, less than expected.

The ISM reported its gauge of manufacturing activity dropped to 56.2in June from 59.7 in May; economists had expected a smaller dip to 59.

Earlier, a report showed initial claims for unemployment benefits rose by 13,000 last week to to 472,000; economists had expected claims to fall.

That was the third of the week's disappointing jobs reports. Separate reports showed planned layoffs rosein June and private companies added just 13,000 jobs in June, well below expectations.

As for Friday's jobs report from the government, economists expect to see 110,000 jobs were lost from nonfarm payrolls in June, according to the latest Reuters survey, which would snap a five-month streak of gains.

Financials were the weakest sector, with Bank of America the biggest decliner on the Dow.

The House has passed the financial-reform reform bill but the Senate will not be dealing with the legislation until after the July 4th holiday recess.

Global concerns added to the pressure on the market after a report showed Chinese manufacturing growth slowed in June and as the S&P and Moody's warned of a possible credit downgrade on Spain.

Spain completed a 3.5 billion euros ($4.3 billion) auction Thursday and demand was weaker than at prior auctions. France also sold nearly 7.5 billion euros in government bonds.

Citigroup ended up half a percent as the U.S. Treasury said it it sold 1.1 billion shares of the stock.

McDonald's and Microsoft were the Dow's best performers.

The short euro/long gold trade appeared to be unwinding, with gold falling nearly $40to settle at $1,206.30 an ounce and the euro gaining against the dollar. Gold stocks were down a good 4 to 5 percent.

Shares of electric-car maker Tesla ended lower for a second straight day, after starting both days earlier. The stock jumped 40 percent on its debut Tuesday but has ebbed in the past two sessions.